How to Know if Commercial Is Right for You Considering a career in commercial real estate? Take some tips from this industry veteran before you get started.
Think you have what it takes to succeed in commercial real estate? Don’t bank on it—at least not until you find out whether you really have the aptitude for this specialized segment of the business.
At 26, I decided to make the switch to commercial and start selling businesses. But let me tell you, it sure didn’t take long for me to realize that I didn’t know a thing about selling businesses! Imagine if you will, the audacity it took for a young gun to announce to a 60-year-old that he was going to sell his business for him. It certainly didn’t work out that way. I was green, and I made a snap decision to switch gears without learning the distinct differences between the two types of real estate. There are so many facets to a commercial transaction that must be worked out, such as zoning, visibility, access, traffic and municipal regulations, to name a few. My inexperience obviously cost me several deals. And though it was an unwelcome wake-up call at the time, it turned out to be exactly what I needed to get to the next level.
Are you a bottom-line kind of person? Are you analytical? If so, keep reading, and I’ll share what has helped me make it in commercial real estate: 1. Test Your Personality
I was introduced to a personality test at one of the Realtor® conventions about 20 years ago, and though so much time has passed that I can’t tell you the precise name of the test, I can tell you that it has served my employees and me very well. It’s so simple that the accuracy with which it gauges someone’s aptitude for commercial real estate is almost scary. It’s just a sheet of paper with about 100 adjectives divided up over four columns. Test takers simply circle the adjectives that best describe them. Once they’ve finished, I simply add up their answers (each type of adjective is given a numeric value), and it will tell me, without fail, whether the person is suited for a managerial, technical, sales or entrepreneurial position. Nine times out of 10, the commercial practitioner will need to have qualities that fit the entrepreneurial type. There are several products on the market that will help you determine whether your personality is the right fit for commercial, such as the DiSC personality profiler. No matter which type you use, this is a very important step because if you’re lacking the aptitude, trust me, you’re wasting your time. 2. Know Your Customers
No matter how much you think you know, your customer always knows more (i.e., the customer is always right). With that in mind, the first thing you need to do is determine your customers’ needs and then try to find the right property for them based on those needs. Rather than spending hours or days trying to figure out what a particular customer is looking for, just ask.
When I hire new sales associates, I immediately have them do a survey of a geographic area encompassing five to 10 miles. This entails putting together their own information about everything that’s on the market whether it be land or buildings for lease or for sale. This helps them get to know that market and the prices properties are going for (i.e., how much somebody is asking for a piece of land or a particular building and whether that price is correct or not). My philosophy is that once you’ve got that knowledge, you can become an information booth for all customers who want to put property on the market. 3. Cash Is King
Everything we do in this business is on a commission-type basis; there are obviously no salaries. In commercial, the income stream is based on a learning curve that typically lasts the first two years. And even if you have a transaction, it may be months or even up to a year before it closes. Having cash in reserve is critical not only to your success but to your survival. If it’s difficult for you to make ends meet in residential sales, don’t even consider making the switch to commercial without a nest egg.
I’ve weathered the financial ups and downs by buying everything with cash. It costs the average small commercial business like mine $10,000 a month just to stay open—so I would never go into debt for something like office equipment, for example. In fact, many commercial firms are consolidating now. One broker whom I know downsized from a large space to a one-room office that she shares with two sales associates. Their desks are practically joined together, but who cares? They’re making money instead of wasting it on swanky office space they can’t afford.
If you own your own business you’ve got to have a bottom-line approach. Most of the customers with whom I work really appreciate that. 4. Educate Yourself
The Certified Commercial Investment Member (CCIM) course gives you the training you need to help you determine such matters as what to do with sales numbers. The course also trains you on how to identify when a certain area might need a new shopping center due to population densities, etc.
In addition, when you’re new in any sector of the real estate business, it’s important to have someone guide you. I recommend calling a commercial broker whom you can trust and developing a relationship with him or her. The CCIM Institute has a mentoring program for those starting in commercial real estate to get them lined up with the seasoned individual. 5. Never Quit
Perhaps the most important piece of advice I can give anyone today is that when the market turns downward, transactions are still going to be made. Maybe there won’t be as many of them, but they still exist. It’s imperative that you have a dogged determination that you’ll stick to what you’re trying to accomplish. This is the third or fourth down cycle I’ve been through in 35 years. It’s never easy, but as long as you set your goals, have a plan and never, ever give up, you’ll have a fighting chance. Charles E. Brenner is broker-owner of C. Brenner, Inc., in Winter Park. Before entering the business, he worked in the space industry, most notably on the Apollo program. His first commercial transaction involved bringing Barnett Bank to “Downtown Goldenrod” just east of Winter Park, 28 years ago. For more information, visit his Web site at www.cbrenner.com or send an e-mail to firstname.lastname@example.org.